AFRICAN BUSINESS NOT RISING TO ITS FULL POTENTIAL

The call from African business SMEs was clear; it is poor leadership that has hindered Africa’s progress and stopped it from becoming the economic powerhouse that it has the obvious potential to be. If the current policy restraints were swiftly dealt with, the existing accelerating initiatives would unlock an estimated R3.4 trillion of new revenue.

There is an abundance of capital held by investors worldwide, and capital flows into countries or continents are based on three factors: • A market • The potential to make a profit • Clear, reliable, and predictable economic and political policies

With 1.3 billion inhabitants in Africa, the evidence could not be clearer.

“The environment is not conducive for this yet because of the lack of structural economic reforms,” says Busisiwe Mavuso. “We are at the precipice, and our leadership is not showing a roadmap. South Africa should be in a much better position economically, but we are hindered as a result of ‘own goals’ scored. Our position as the most advanced economy in Africa is being overtaken by our neighbors and nascent, attractive, economies like that of Rwanda. We are failing because we do not have our own house in order. This is unattractive to investors and we are letting the 1.3 billion people on this continent down.”

Terry Booysen said that Corporate Africa should take Corporate Governance more seriously. “Governance also means discipline – the discipline of self and the collective” Citing the International Transparency Report, he said that the political integrity across our respective African governments is sorely lacking. “We are getting this horribly wrong – in terms of employment, disparity, crime, corruption, and general mistrust in our leadership.”

Saul Molobi lamented the “deliberate stealing and appropriation of African wealth and the destruction of our identity” through decades of colonialism. “History isn’t happening perchance. It is a deliberate, and characterized by famine, disease and terror.”

THE POST-COVID PATH

The economic outlook was .3% growth before the pandemic – an already bleak prospect. In the midst of the pandemic 2.2 million jobs were lost in the third quarter, following a 51% negative growth in the second quarter. “COVID has unraveled

A PHYSICAL AND VIRTUAL MEETING OF MINDS

the progress we have made in 26 years,” says Mavuso. “Two things are certain: life as we know it will never be the same, and that the opportunity for growth is in front of us.”

The pandemic stalled the global supply chain, which has forced industries to localize. However, Africa needs to be even more inwardly focused. The New African Continental Free Trade Corridor was presented in 2012, but eight years later it remains a theory. Opening trade corridors between countries could increase our GDP by 50% and establishing a single market for goods and services would streamline trade and attract international investment. In West Africa, the sea corridor is begging to be utilized, and in East Africa, the rail and road opportunities are immense. Building more links between African countries is the key to sustainable economic empowerment that is not tethered to a foreign power.

UNPACKING THE STATS

“COVID-19 has reversed Africa’s strong growth trajectory. Under the baseline scenario, real GDP in Africa is projected to contract by 1.7 % in 2020. In the worst-case scenario, the GDP could fall by -3.4% in 2020. Partial recovery of about 3% is expected in 2021,” said Dr Hanan Morsy, Director: African Economic Outlook – The African Development Bank.

Extreme poverty is projected to increase by 2.14 – 2.84 pp in 2020 and by 2.51 pp in 2021. COVID could push 49 million into extreme poverty. An estimated 25 to 30 million jobs could be lost as a result of the economic fallout.

The impact of COVID-19 and prospects for recovery vary across regions and economies. Tourism-dependent countries and oil exporters would suffer more losses than non-resource intensive economies. Fiscal deficits are rising and external positions are expected to worsen significantly.

POLICY RECOMMENDATIONS

Fiscal policy responses • Support vulnerable households with targeted cash transfers and social safety net programmes. • Help businesses stay afloat by providing targeted subsidies and tax relief.

Monetary policy responses • Ease financial conditions by injecting liquidity. • Use unconventional policy tools to support affected sectors.

Labour market and informal sector responses • Assist vulnerable groups, especially women and youth in informality • Use active labour market policies to protect workers and their jobs.

* Source: Dr Hanan Morsy, African Development Bank

OUR REALITY

We can achieve continental economic integration. Africa is poor by choice – we are not poor in resources or skills or positioning,” said Mavuso. “We are where we are because our leaders are not who they ought to be. And that is the honest conversation that must be had.”

The reality may be unfortunate, but we should take heed of the entrepreneurial spirit that resides within the citizens of all 54 African countries (or 55 African countries if we include the Saharawi Arab Democratic Republic, as per the AU prescripts after the AfCFTA was ratified by more than two thirds majority of the AU member states).

CONSCIOUS ENTREPRENEURSHIP

Conscious Entrepreneurship is more than a corporate buzzword. It is a term that will grow to reflect the leaders of the here and now. To make Brand Africa shine, we must collaborate with teams around the globe to push ideas forward a forge a path towards long-term prosperity for the continent. The world is becoming increasingly efficient, and the search for profit is no longer driven by labour. $15 trillion worth of labour-intensive jobs will become automated in 10 years – that is 15% of the GDP moving from labour to automation. Hence, it is vital that Africa’s population understands and trains in the new technologies. The demand for skills such as data science, machine learning and data engineering is so vast that people with these skills can write their own paychecks.

“Unfortunately, the asymmetry of opportunity still exists, and it comes from a few concentrated hubs,” said Shiv Vikram Khemka, “but with the world becoming increasingly connected, the time and space divide can be bridged.” In this new world, the ivory tower can be demolished, and a global ecosystem can emerge where mutual support and lessons are shared in a sportified environment. There is a long way to go – 8% of the population controls 83% of the wealth – and it is only through a common understanding that there is plenty for everyone can we make progress and harness our collective power.

ENTERING THE AGE OF SUSTAINABILITY

This is the beginning of the Age of Sustainability, therefore today’s companies should watch and serve not only shareholder interests, as they did mostly in the past, but all stakeholder interests, including employees, customers and the larger community. “This is the only way to build a better world and help to achieve Sustainable Development Goals,” explained Dr Hegyi. “Companies with a purpose are already doing that. Companies should reinvent their brands and be able to create new, sustainable brands. This is where our new service, Impact Branding, already offered in Africa, can help companies to bring sustainability into brand value creation.”

The private sector must play an important role in achieving the UN’s Sustainable Development Goals, therefore it is important for companies to integrate sustainability into their core strategies. If more and more African companies integrate sustainability into their core strategies and communicate their achievements - not only will they improve their own image, but also positively contribute to the overall brand of Africa.

SPEAKERS & PANELLISTS

Dr Hanan Morsy, Director: African Economic Outlook, African Development Bank | Cairo, Egypt

Shiv Vikram “Khemka”, Vice President: SUN Group | Zurich, Switzerland

Busisiwe Mavuso, CEO: Business Leadership South Africa | Johannesburg, RSA

Terry Booysen, CEO: CGF Research Institute | Johannesburg, RSA

Dr Gábor Hegyi, Capital Communications | Budapest, Hungary

Saul Kgomotso Molobi | CEO: Brandhill Africa | Johannesburg, RSA

Moderator: Vusi Thembekwayo, Global Speaker and Venture Investor